It was mentioned that December for the most part should be a good month for us, but so far December has done nothing but trend down. We have warnings to talk about and levels that need to be held and pivots that have been broken. The thing that concerns me most, and I did mention the same thing last week, is the International Index. So let’s start with the easy and work to the most difficult.
The S&P once again fell below my CBL line which puts this index on watch. Warning 1 is back on but what is more concerning to me is that the last pivot low did not hold. I drew a short yellow horizontal line from the last pivot low to show that Thursday and Friday, price closed lower than that level. Technical analysis would indicate that we are heading lower based on that one indicator alone. Good news is the 50 day moving average held, so warning 2 did not fire. The blue channel that I drew to give me an early heads up that trend was slowing failed this week, so that is another indicator failure. Am I concerned? Yes. Am I ready to bailout here? No. This index is under a watch.
The Small Cap is also in the same exact position as the S&P 500. The only thing that is different is that price Thursday and Friday actually firmed up and reversed back up. If this strength can continue next week the S&P 500 will surely follow. The Small Cap did re-fire warning 1 this week, so we are under a watch here also.
I normally always save Bonds for last to talk about because they are not worth investing in. If stocks do continue to tank and Bonds continue to hold the line at $106, it could be a nice entry into Bonds. I’m not ready to make that call this weekend, but it is worth noting and worth watching.
Above is the monthly chart for the International Index. At first glance it is easy to see we are safe because price is established well above the 10 period moving average. Price is still above the primary solid green trend line and the Intermediate. So what could possibly be wrong? Let’s move to the weekly chart below.
So now we are zooming in closer to look at price movement and I’m also using the 10 period moving average to give me warnings that a reversal is likely. I marked areas above in the past that price did cross below the 10 period moving average and we did have some major pull backs. This week we officially crossed and closed below that point. Last week I said I was concerned, so this week I’m doubly concerned that this index is in trouble. Trying to find a bright spot here, price is still above the trend lines.
So now we are down to the daily charts that I normally work off of and talk about. Last week we fell out of that symmetrical triangle to the downside which means that we are going lower. But then we had lower pivot low form, so we could draw a bull flag. So what happened this week? We fell out the bottom the Bull flag and I can tell you that normally means bad things to come. It gets worse! We re-fired warning 2. So there is really nothing here to like on the daily chart. The selling point or bailout point is sitting at $63.20 or another 1.2% lower. As much as I hate to hold on here because of all the warnings, I will. I figure that only 30% of my TSP is invested here and another 1.2% drop is not going to kill my account, so I will wait for the official bailout point. Honestly I do not think prices are going to reverse.
Conclusion: S&P500 and Small Cap are under watch. Bonds are still a no go unless your bottom fishing. The International I will be watching like a hawk next week hoping that prices reverse. I’m still waiting on the Christmas rally in stocks!!! Come on stock market Gods.
Have a great weekend !!
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